Zuora Inc (ZUO) Posts Strong Fiscal 2024 Results with Subscription Revenue Up 13%
Subscription Revenue Growth: Zuora Inc (NYSE:ZUO) reported a 13% year-over-year increase in subscription revenue, reaching $383.4 million for the full fiscal year 2024.
Profitability Leap: Non-GAAP income from operations surged to $47.5 million, a substantial rise from $2.5 million in fiscal 2023.
Net Loss Reduction: GAAP net loss narrowed significantly to $68.2 million, or 16% of revenue, compared to the previous fiscal year's $198.0 million, or 50% of revenue.
Adjusted Free Cash Flow: Adjusted free cash flow turned positive at $44.3 million, a marked improvement from negative $27.8 million in fiscal 2023.
Customer Growth: The number of customers with an annual contract value (ACV) of $250,000 or more increased to 461, up from 431 the previous year.
Zuora Inc (NYSE:ZUO), the leading monetization suite provider for modern businesses, released its 8-K filing on February 28, 2024, revealing a year of significant growth and improved financial health. The company, known for its cloud-based software that enables companies to manage subscription-based services, reported a robust increase in subscription revenue and a dramatic improvement in both GAAP and non-GAAP profitability metrics for the fiscal year ended January 31, 2024.
Financial Performance Highlights
Zuora's fiscal year 2024 was marked by a 13% year-over-year growth in subscription revenue, which on a constant currency basis, amounted to a 15% increase. Total revenue for the year stood at $431.7 million, up 9% from the previous year. The company's strategic focus on acquiring new customers and improving operational efficiency paid off, as evidenced by the expansion of its non-GAAP operating margin by 10 percentage points.
The fourth quarter results were equally impressive, with subscription revenue climbing to $100.2 million, a 12% increase year-over-year. Total revenue for the quarter was $110.7 million, up 7% from the same period last year. The GAAP loss from operations significantly decreased to $17.2 million from $99.7 million in the fourth quarter of fiscal 2023, while non-GAAP income from operations jumped to $15.9 million from $2.2 million.
Zuora's CEO, Tien Tzuo, highlighted the company's success, stating,
Fiscal 2024 was a year of balanced growth and profitability where we accelerated new customer acquisition by focusing on smaller, faster lands. We improved adjusted free cash flow by $72 million and expanded our non-GAAP operating margin by 10 percentage points, putting Zuora in a stronger position as we enter a new fiscal year."
Operational and Financial Metrics
The company's customer base grew, with 461 customers having an ACV of $250,000 or more, up from 431 the previous year. The Dollar-based Retention Rate (DBRR) was 106%, slightly down from 108% as of January 31, 2023. Annual Recurring Revenue (ARR) saw a 10% growth, reaching $403.1 million compared to $365.0 million the previous year.
Zuora's balance sheet remained solid with cash and cash equivalents and short-term investments totaling $514.2 million as of January 31, 2024. The company's adjusted free cash flow was a positive $44.3 million, a significant turnaround from the negative $27.8 million in fiscal 2023.
Looking Ahead
For the first quarter and full fiscal year 2025, Zuora provided guidance that reflects continued growth and profitability. The company expects subscription revenue to be between $98.0 million and $99.0 million for the first quarter and between $410.0 million and $414.0 million for the full year. Non-GAAP income from operations is projected to be between $14.0 million and $16.0 million for the first quarter and between $79.0 million and $81.0 million for the full year. Additionally, Zuora anticipates an ARR growth of 8% to 10% and an adjusted free cash flow of over $80.0 million for fiscal 2025.
Zuora's strong financial results and positive outlook are a testament to the company's successful strategy and execution. The company's ability to adapt and thrive in the evolving subscription economy positions it well for sustained growth and profitability.
For more detailed information on Zuora Inc's financial performance, including full financial tables and metrics, please refer to the full 8-K filing.
Explore the complete 8-K earnings release (here) from Zuora Inc for further details.
This article first appeared on GuruFocus.
